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CLSA banking analyst Mike Mayo weighs in on the European debt crisis and MF Global's bankruptcy.
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Their life force from Berlin as we wait for secretary Geithner has press conference with his German counterpart let's bring in Mike -- MIT with the since studio banking analyst for CLS -- Credit Agricole affiliate and also the author of the new book we had John talk about the book exile on Wall Street.
Analysts might save the big banks for themselves.
Good book out of the middle of it you did call the crisis here in the US regularly when was that the first call that you expressed concern about the banks was right around the turn of the century of some -- What about this one in Europe right now.
Well you don't want to see.
And then given aspirin for broken lake and we got equivalents master with the S Central Bank -- of global coordinated after which was good.
We'll see if we get dose of value him for something heavier to make a soft feel good the main issue is are you going to repair.
With the analogy -- broken leg and tell I'm waiting to hear what you know they're.
Treasury Secretary has to -- a few minutes to it's really day by day statement by statement is not even what.
They do it's what -- say at this point that's driving markets but.
The big issue is how you get -- seventeen countries.
To listen to -- fiscal constraints.
From Brussels wherever else are going to do that's that's it a tough act now having said that the CLC congress is a little bit positive.
On the situation he's saying he thinks that you take haircuts on Greek debt and that's it many monetize the debt and if you contain Europe.
And that contain the problems the US banks will be okay.
You -- that I'm not there yet -- you don't always -- -- but the one thing I said -- it doesn't agree with all the people who works with all the time so you may not -- the same things and -- firm.
It we allow.
Many independent views we don't we don't force people to be on the same page doubt my concern is.
This and the words of so what else have my firm this would be the biggest constitutional change in Europe and for works still if you're given up.
Your fiscal rights and all those different countries -- how are you going to do that and even if the politicians decide hey let's all go in this together how are they gonna sell that back home.
That's the ongoing question.
You don't period probably so they've gotta come up with.
Another way to deal with us and -- to shift gears just a little bit because -- is it right in New York real house Mike.
You have a speaking of the European debt you have Jon Corzine who essentially.
Comes and MF global starts making bets on European sovereign debt you have a risk manager who says to the -- wait a minute he's taken on too much risk.
This is.
-- are financial crisis that someone is still given the power to essentially put a firm out of business.
Is this a sign that we should be more worried about our institutions here at home.
That's why I wrote the book because nothing really has changed when it came down to incentives if Jon Corzine had 9% its net worth MF global we've taken those rest.
You had a breakdown.
In regulatory controls accounting.
Rating agencies Wall Street analysts -- block I didn't cover enough globe my colleague.
Had the only negative rating on the company may even see this happening in the yet -- a break and all the overseers.
Falling short saying -- here's the ex Goldman person hears the ex governor New Jersey he can get the job done.
A degree of blind faith in his ability and you see that even in.
Though face of the warnings that internally they went ahead and bought six billion dollars of European sovereign debt it's it's not the way our corporation -- right now what do -- I think free market should be intervening here and that means making sure the boards of directors.
Actually hold.
These CEOs accountable not just accepting of this -- to a successful before let him do whatever you want.
You know it's interesting because as we speak there's this Goldman Sachs banking conference and I'm told that's going on -- -- book there's a scene in and I think you are between jobs of the time you kicked out of that conference.
The job but are you on that one it's going on now talking.
About the state of our bank in the US are we right back to where we started.
By the way on the Goldman Sachs conference I'd like -- I'd like to -- kicked that are competent if you have the top bank CEO of United States there and they are talking about.
Conditions here so if it breaks down you have.
The direct exposure of the biggest six banks about fifty billion dollars net exposure semi five billion dollars for its exposure that's not gonna break the bank the bigger issue is the impact.
When capital markets we saw that in the third quarter the C a little bit of that fourth quarter the second order effect.
How much are the US banks lending to an eighty's which in turn have exposure into Europe the -- global example.
And third is the whole risk off mentality the crisis of confidence whether -- the investors the corporations are consumers so if Europe falls down it's going to have an impact.
When the US Mike great to see it was always and passionate as always my plan -- well thank you come back.
